Dallas Regional Medical Center

About Dallas Regional Medical Center

William Schoen, chairman of Health Management Associates (HMA), once described his company as the "Wal-Mart of the hospital business" because, like Sam Walton's empire, HMA thrives in small-town America. The company operates a network of some 70 hospitals and more than 460 clinics in 15 states, mainly in the South (although it also has facilities in – more...Washington and Pennsylvania). Combined, the facilities have about 10,500 licensed beds. HMA's hospitals provide general medical and surgical care, along with outpatient and emergency room services and specialty care in such areas as cancer care and obstetrics. The organization also operates an increasing number of outpatient surgery centers.

Because it serves smaller markets, HMA's facilities aren't large research hospitals that offer such procedures as organ transplants and other highly specialized services. HMA operates on a decentralized model, with local CEOs, CFOs, and Chief Nursing Officers overseeing the daily operations of each hospital. The company maintains central control of finances, purchasing, and other systems, which gives it advantages of scale and the buying power that comes with operating dozens of facilities.

Sales & Marketing

In 2011 about half of HMA's revenues were generated through patient care reimbursements from commercial insurance firms. Self-pay admissions accounted for 10%, and Medicare and Medicaid, together, contributed 40%. Like other hospital operators, some of HMA's revenues are offset by caring for patients who cannot pay their bills.

Financial Analysis

In 2011 HMA continued a five-year trend of increased revenues, achieving growth of more than 13% over 2010 to a record $5.8 billion. The company's net income hit a three-year high with a 19% jump over 2010 to $178.7 million. HMA closed out the year with $6 billion in assets. The company's strong balance sheet and capital position allow it to continue to invest in various acquisitions.

Strategy

Over the years, HMA has built its portfolio through numerous acquisitions of hospitals that serve as the primary source of health care in their regions (basically ensuring a loyal patient base). It typically acquires underperforming hospitals in attractive non-urban markets and then upgrades the facilities and equipment thereby increasing patient volume and efficiency. The health system also enters into joint ventures with physicians, allowing doctors to own a minority stake in the hospitals in which they practice.

HMA also upgrades existing hospitals and broadens its service offerings in order to prevent local populations from having to travel to urban medical centers for treatment. Other strategic initiatives include recruiting qualified primary care doctors, specialists, and administrators; investing in strategic partnerships; and working to effectively control its costs. From time to time, HMA also divests operations that no longer fit into its plans.

Some of the company's quality and efficiency programs aim to prepare for upcoming changes to the way hospitals are reimbursed by the federal government. HMA's initiatives include a medication error prevention program using a handheld scanner; hardware and software upgrades of its emergency rooms' clinical systems; and improvements to the system's quality management systems including data collection and benchmark measurement processes.

Mergers & Acquisitions

In 2012, HMA the company established a joint venture with INTEGRIS Health involving five hospitals in Oklahoma. HMA took on an 80% controlling interest in the hospitals and oversees the day-to-day operations. – less